IP Law Daily, TRADEMARK—D. Utah: Suit between competing healthcare employee placement services not stayed pending TTAB proceeding, (Oct 21, 2020)

By Todd Fanter, J.D.

Although the cancellation proceeding could simplify whether plaintiff National Staffing Solutions, Inc. held a valid mark, many other issues were before the court in the infringement and unfair competition suit against National Staffing Specialists, LLC.

In a trademark infringement and unfair competition suit between competing providers of employment placement services for healthcare professionals, the federal district court in Salt Lake City has denied the defending company’s motion to stay the litigation pending resolution of a cancellation proceeding before the Trademark Trial and Appeal Board. Although the cancellation proceeding would likely simplify the issue of whether the complaining provider had a valid, protectable trademark, that was only one issue among several others before the court and would not significantly simplify the case. Additionally, the case status and likelihood of undue prejudice weighed against a stay, in the court’s view (National Staffing Solutions, Inc. v. National Staffing Specialists, LLC, October 20, 2020, Campbell, T.).

National Staffing Solutions, Inc. ("National Solutions") filed suit against National Staffing Specialists, LLC ("National Specialists") for trademark infringement and unfair competition under federal and Florida law. National Specialists moved to stay the litigation pending resolution of a trademark cancellation proceeding before the Trademark Trial and Appeal Board (TTAB). Five days later, National Specialists moved to dismiss four of National Solutions’ claims.

National Solutions was a Florida corporation that provided employee placement services for health care professionals across the United States. National Specialists was a Utah-based company that also provided employee placement services for health care professionals. National Solutions had two registered marks with the United States Patent and Trademark Office. It owned the NATIONAL STAFFING SOLUTIONS character mark and the NATIONAL STAFFING SOLUTIONS design mark.

National Specialists argued that a stay was warranted because the TTAB proceeding would simplify the issue of whether National Solutions’ trademark was valid and protectable. The court agreed that resolution of the TTAB proceeding would clarify which presumptions applied to this case, based on whether National Solutions’ trademark remains registered. But this was the extent to which the TTAB proceeding would simplify this issues of the case, and that was not enough to justify a stay.

The court found that any presumption created by resolution of the TTAB proceeding was rebuttable, not binding, and would require the same factual issues to be litigated again if challenged in this court.

Additionally, even if National Solutions’ registration was cancelled, the court found National Solutions’ claims were not dependent on federal registration. Registration entitled National Solutions to a presumption of distinctiveness, but National Solutions’ mark could still be protected under the Lanham Act and Florida common law without registration.

Finally, this case involved more issues than just whether National Solutions had a valid, protectable mark. National Solutions sought injunctive relief and damages for trademark infringement. The TTAB does not adjudicate issues of trademark infringement. Unlike a federal district court, the TTAB cannot provide relief for an infringement claim, either injunctive or by way of damages.

The court also recognized that this case was in its infancy. National Specialists had not yet answered the complaint, a scheduling order had not been entered, discovery had not begun, and initial disclosures had not been exchanged. Here, neither party nor this court had expended significant resources yet. Discovery was just starting in the TTAB proceeding, and the court was confident that the parties could plan discovery knowing that this case would move forward at the same time as the TTAB proceeding. The court ruled discovery could occur concurrently in both proceedings in a way that was not overly duplicative or wasteful.

The court additionally found that the earliest possible date on which the TTAB proceeding would be scheduled for final decision was February 8, 2022. That would be assuming no deadlines were extended and that parties did not request oral argument. National Solutions would not be able to seek injunctive relief until that date, and National Specialists would be able to continue its alleged infringing activities until then. Allowing the alleged infringing activities to continue for at least another year and a half would result in undue prejudice for National Solutions.

National Specialists also moved to dismiss National Solutions’ first claim for federal trademark infringement, arguing that National Solutions had not sufficiently pled a plausible claim. National Specialists also moved to dismiss National Solutions’ third, fourth, and fifth causes of action, maintaining that these claims under Florida Law were not actionable against National Specialists.

The court found that to state a plausible claim of trademark infringement, National Solutions was required to plead only that National Specialists used a similar mark that was likely to confuse consumers. National Solutions did so. On its face, National Specialists’ mark was similar to National Solutions’. The font and layout of the NATIONAL STAFFING SOLUTION text in National Specialists’ mark appeared to be almost the same as that of National Solutions’ mark. Whether the presence of the star made a difference in terms of confusing consumers was a question of fact. The court ruled National Solutions had sufficiently pled a plausible trademark infringement claim under the Lanham Act.

Lastly, National Specialists also contended that because it did not operate or conduct any activity in Florida, any application of Florida statutes or common law was "unjustified and improper." National Specialists contended that National Solutions only agreed to transfer venue to Utah because it wanted to avoid outright dismissal of the case for lack of personal jurisdiction. The Florida court transferred this case based on facts suggesting a personal jurisdiction problem: "Defendant and Defendant’s agents reside and may be found in Utah. Defendant’s principal place of business is in Sandy, Utah. Additionally, Defendant contends it does not have offices in Florida or conduct business activities in Florida." The present court ruled National Specialists’ pending motion to dismiss did not address any of the outstanding choice-of-law issues, and this court was without facts to resolve them. Therefore, the court instructed National Specialists to re-brief its motion to dismiss. National Solutions would then have the opportunity to respond.

This case is No. 2:20-cv-00534-TC.

Attorneys: Adam Colby Losey (Losey PLLC) and Bradley J. Weber (Weber Law Group PLLC) for National Staffing Solutions, Inc. Clinton E. Duke (Durham Jones & Pinegar PC) for National Staffing Specialists, LLC.

Companies: National Staffing Solutions, Inc.; National Staffing Specialists, LLC

Cases: Trademark GCNNews UtahNews